Tags: gold | dollar | nixon | price

Gold and the Dollar Got 'Divorced' 45 Years Ago

Gold and the Dollar Got 'Divorced' 45 Years Ago

(Dollar Photo Club)

By
Monday, 22 August 2016 07:18 AM Current | Bio | Archive


In a nationally televised broadcast on Sunday night, August 15, 1971 (just more than 45 years ago), President Nixon shocked the world (in Japan, it was called “Nixon Shokku”!) by divorcing the U.S. dollar from the price of gold.

Technically, he “closed the gold window” to foreign depositors who counted on exchanging their U.S. dollars for gold at a rate of $35 per ounce. Nixon’s move effectively set the U.S. dollar’s value afloat, and it quickly sank. The price of gold quickly rose to $42 in the open market, then to over $100 and to nearly $200 per ounce on the last day of 1974, when it became legal for Americans to own gold.

Amazingly, the Dow Jones Industrial Average rose 33 points (+3.8%) on the Monday morning after Nixon closed the gold window. That’s because he made a few other popular moves which appealed to Americans who did not care one way another about gold. For instance, he imposed wage and price controls and issued a 10% surcharge on all imports.

These latter two moves were very popular. A poll of 220 households by Albert E. Sindlinger & Co. on August 16 revealed that 75% of Americans favored the President’s proposals, while “most of those who dissented did so on the ground that Mr. Nixon’s actions should have come sooner.” Mr. Sindlinger said, “In all the years I’ve been doing this business – more than 15 – I’ve never seen anything this unanimous, unless maybe it was going to war after Pearl Harbor.”

Almost exactly three years later, on August 14, 1974, Congress finally allowed U.S. citizens to own gold for the first time in 41 years, as of December 31, 1974. This came as a hollow victory for gold investors since Americans missed all of gold’s gains from $20 (in 1933) to $195 (the price of gold on December 30, 1974). Gold then proceeded to fall sharply after it was finally legal to own, falling to $102.20 on August 30, 1976, but those who kept the faith were rewarded with a rise to $850 gold as of January 20, 1980.

Here’s the scorecard (dollar vs. gold vs. stocks) since gold and the dollar were divorced 45 years ago:

  • The U.S. dollar is down 97.4% in terms of gold since 1971.
  • The Dow Jones index is up 1,990% since August 15, 1971, but
  • Gold is up almost twice as much as the Dow, up 3,717% in the same time.

 

Dr. Mike Fuljenz is a member of the Newsmax Finance Brain Trust.  Click Here to read more of his articles.  He is also the editor of the NLG award winning Michael Fuljenz Metals Market Weekly Report.  Discover more by Clicking Here Now.

© 2019 Newsmax Finance. All rights reserved.

   
1Like our page
2Share
MikeFuljenz
In a nationally televised broadcast on Sunday night, August 15, 1971 (just more than 45 years ago), President Nixon shocked the world (in Japan, it was called "Nixon Shokku"!) by divorcing the U.S. dollar from the price of gold.
gold, dollar, nixon, price
452
2016-18-22
Monday, 22 August 2016 07:18 AM
Newsmax Media, Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved